2016 – time for a new economy?

Thursday 14 January 2016

Last year Assemble, an architecture collective, and Granby 4 Streets Community Land Trust, a client that we had worked with on the transfer of properties from Liverpool City Council, won the Turner Prize. They were given the award for what the judges called “a ground-up approach to regeneration, city planning and development in opposition to corporate gentrification”. It was the first time that “non artists” had won the coveted award.

Commenting on the award in the Big Issue, Dan Gregory asked:

“So what does this mean for 2016? It means we need more businesses that don’t destroy the planet and only enrich the already wealthy. It means for change to catch on, it has to be both sexy and safe, not worthy and woolly. It means that some emergent new business models need to change if we are to truly share the benefits. And it means that we’re growing tired of detached ironic cool, and perhaps crave something more authentic.”

We agree. Later this month Anthony Collins Solicitors is sponsoring the 4th Ways Forward conference for the co-operative movement, a conference which started in the midst of the crisis at the Co-op Group but which is becoming a forum for discussion about the wider economy, and what kind of business we want to encourage. The theme of the conference this year is “building an economy for people, not profit”.

Now you might have thought that that’s what we already had, but you could argue that recent events have cast some doubt. Large and powerful corporations have let people down. Oil spillages, sub-prime mortgages, phone-hacking, interest rate fixing, PPI miss-selling, prisoner-tagging fraud, tax avoidance, and now emissions deception all make it clear that at the core, there is a tension in the investor-owned business model between the single minded pursuit of profit, and the wider public good.

Of course many for-profit businesses (particularly privately-owned ones) are highly conscious of their social impact, and behave responsibly. They create jobs, provide apprenticeships and training, encourage local trade, help to create pensions savings, and share profits with their local communities and other good causes. Many private businesses operate with a clear concern for social responsibility, and do so because it is how their owners want them to behave. But un-tempered profit-seeking knows no moral boundaries, and over the years Parliament has had to intervene to protect people: protecting workers (e.g. Factories Acts); protecting consumers (Railway Protection Act); the environment (Clean Air Act); and even protect investors (Companies Acts).

Increasingly people are searching for a new way of doing business. The last ten years have witnessed a surge of interest in social enterprise, social business, social firms, employee ownership and social finance. We believe that this reflects a clear intent by an increasing number of business people to distinguish themselves from the anti-social behaviours of those businesses solely concerned with shareholder return.

Again, this concept is not new. Since people started trading, there have been those motivated mainly by self-interest, those motivated primarily to benefit others, and everything in between. The self-help (co-operative and mutual) and philanthropic (charitable and voluntary) traditions reflect our social nature: the impulse to look out for each other, to provide for ourselves and our families but also for communities and future generations: everyone, including the destitute and vulnerable.

Historically, the self-help and philanthropic movements were themselves a response to the poverty, hardship and suffering of those affected by the transition from an agricultural to an industrial economy. The response by these people-based movements providing welfare, healthcare, education, housing and much else besides was so successful that by the early 20th century, the state recognised the importance of these social benefits and wanted them to be universally available. So the state assumed responsibility; the public sector was born, and self-help and philanthropy were side-lined.

The issues we now face come partly from the fact that a large, controlling public sector has become unsustainable. An aging population living much longer needs more care and support than the public purse can afford, especially after a financial crisis caused by an unfair business model, which the public purse had to bail out. We are all dealing with funding cuts for services that we have been used to the state providing, and all communities need to decide how we want to respond.

It’s not just co-operative anoraks, tree-hugging lefties or Occupy activists who think these thoughts. In 2014 the Governor of the Bank of England strongly criticised City behaviour:

“Bankers made enormous sums in the run-up to the crisis and were often well compensated after it hit. In turn, taxpayers picked up the tab for their failures.”

Many are angered and dismayed by the scandals of excessive pay, dishonourable commercial behaviour and profiteering, and are looking for a different approach to doing business because they know that things can be better.

So today’s response is the rise and rise of social business, which in the UK includes the arrival of social enterprise, the revival of self-help (mutuality and co-operation) and voluntarism, and the emergence of some fascinating contemporary new models crossing a number of these approaches.

Maybe 2016 is the time to consider what you really want to achieve; whether your business model reflects your aims and aspirations; who your allies are, and how you work with them; and what your response is, to the challenging context in which we find ourselves.

We work with lots of you, and you all have one thing in common: you agree with John Ruskin that, in the end, “there is no wealth but life”. We will be supporting you all we can in 2016 – that’s our commitment for the new year.

For more information

For more information on issues facing co-operative and social enterprises please contact David Alcock or Cliff Mills

In all the action to remove defective cladding, leaseholders have been the elephant in the room. Whilst social landlords might have adopted a wait and see approach private landlords do not have that luxury.